Correlation Between Petroleo Brasileiro and Wesmark Tactical

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Wesmark Tactical at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Petroleo Brasileiro and Wesmark Tactical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Wesmark Tactical Opportunity, you can compare the effects of market volatilities on Petroleo Brasileiro and Wesmark Tactical and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Petroleo Brasileiro with a short position of Wesmark Tactical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Wesmark Tactical.

Diversification Opportunities for Petroleo Brasileiro and Wesmark Tactical

0.67

Correlation Coefficient

Petroleo Brasileiro  Wesmark Tactical

Poor diversification

The 3 months correlation between Petroleo and Wesmark is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Wesmark Tactical Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wesmark Tactical Opp and Petroleo Brasileiro is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Petroleo Brasileiro Petrobras are associated (or correlated) with Wesmark Tactical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wesmark Tactical Opp has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Wesmark Tactical go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Wesmark Tactical

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Wesmark Tactical. In addition to that, Petroleo Brasileiro is 3.46 times more volatile than Wesmark Tactical Opportunity. It trades about -0.01 of its total potential returns per unit of risk. Wesmark Tactical Opportunity is currently generating about -0.04 per unit of volatility. If you would invest  1,203  in Wesmark Tactical Opportunity on December 5, 2024 and sell it today you would lose (15.00) from holding Wesmark Tactical Opportunity or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Wesmark Tactical Opportunity

Petroleo Brasileiro

Risk-Adjusted Performance

Very Weak

Over the last 90 days Petroleo Brasileiro Petrobras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Wesmark Tactical Opp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wesmark Tactical Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Wesmark Tactical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Petroleo Brasileiro and Wesmark Tactical

The main advantage of trading using opposite Petroleo Brasileiro and Wesmark Tactical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Wesmark Tactical can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Wesmark Tactical will offset losses from the drop in Wesmark Tactical's long position.

The idea behind Petroleo Brasileiro Petrobras and Wesmark Tactical Opportunity pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.